Two huge fires in California. The Carr Fire — which has killed people — and 16 others are plaguing the Golden State and causing billions in damages. A fire in the Clear Lake area is called the Mendocino Complex Fire. It is now the largest fire in California history and is a raging inferno that is gobbling up all the homes and businesses in its path.

Worse, there are over 60 uncontrolled fires burning in the seven states of the West.

Moody’s says the Carr Fire in the Redding area will cost insurers $1.5 billion. Aon’s risk analysis arm Impact Forecasting agrees. “The July 2018 fires in California follow what was the costliest year ever recorded for the insurance industry with the wildfire peril in 2017. Insurers paid out more than USD14 billion in insurance claims due to fire damage around the world, almost entirely due to the October and December events in California. In the industry’s history, only ten individual fires have prompted more than USD1 billion in payouts (2018 USD),” Aon said in a news release.

Moody’s said insurers selling homeowners insurance will take the biggest hit. With over 40,000 people evacuated, insurers are going to be on the hook for additional living expenses. Commercial insurers will see claims for business interruption rise.

The ratings firm says the average cost per home is close to $991,000. High construction costs from the 2017 fires is driving up the cost per home. Then there’s the hit from the Fair Access to Insurance Requirements Plan — or FAIR Plan. Insurers are required pay into the insurer of the last resort plan that insurers property in remote locations or with high wildfire exposure.

Those payments are based on marketshare in 2017. That means State Farm with $1.3 billion, Farmers at $1.2 billion, CSAA’s $520 million and Auto Club’s $499 million will pay the most.

Moody’s also said we’re likely to see insurers “reassessing” how it insurers property in California.

“Several recent academic studies have concluded that wildfire exposure for the Western U.S. has increased in recent years because of drier forests, a longer burning season, and higher average temperatures. After record losses in 2017, California homeowners and commercial property insurers will likely continue to reassess their exposures, pricing and reinsurance arrangements with regard to wildfires,” the Moody’s report concluded.

So far this year losses from wildfire in California have topped $12 billion. It’s a test case of sorts for the seven states we mentioned earlier in this story. Verisk Insurance Solutions said more than 13% of the homes in those states are at risk for wildfire.

Insurance commissioner Dave Jones calls it a “growing problem.” The “new normal” is Governor Jerry Brown’s definition as over two-million California homes are among that 13%. Both men worry that insurers will be leaving the state or will seriously restrict where they will insure.

It’s a claim Mark Sektnan of the Property Casualty Insurers Association of America (PCI) denies. “California insurance companies are well-regulated, well-capitalized, and heavily reinsured to protect consumers and ensure claims are paid following major catastrophes like the current 2018 California wildfires. California continues to have a competitive and healthy homeowner's market,” he said.

However, there are rumors of non-renewal. Liberty Mutual and one other insurer have said they’re going to make restrictions on what they insure.

In its statement, Liberty Mutual said, “Catastrophic wildfires pose a significant risk to our customers and our company. Our primary goal is to ensure that we are there for our customers when they need us the most and can deliver on our promise to handle claims quickly and fairly. Unfortunately, due to California’s wildfire experience in recent years, we have had to take the difficult but necessary step to responsibly manage our overall catastrophe exposure, safeguarding our ability to pay policyholders’ homeowner claims. This is the same approach we use to manage our business throughout the country. As a result, we expect to non-renew about 1 percent of our California property customers this year. These policies are all located in areas with high levels of wildfire exposure and will have met specific physical conditions.”

That led to a bill sponsored by State Sen. Bill Dodd that will restrict cancellations to two-years after a disaster like wildfire or mudslides.

However, the California Department of Insurance says cancellations are hard to track and it believes non-renewals in California jumped 15% from 2015 to 2016. There are no estimates from 2016 to now.

Meanwhile, Governor Brown said the state can expect even more fires before the official wildfire ends. “We’re in for a really rough ride, and it’s going to get expensive and it’s going to get dangerous. We have to apply all our creativity to make the best out of an increasingly bad situation, not just in California but all over America and all over the world.”

With that Commissioner Jones set out some policies to help insureds with their claims. In a statement issued last week Jones said, “Survivors of these destructive wildfires need all the help we can provide. I am asking California insurers to adopt the expedited claims handling procedures, move quickly to expand their claim adjuster teams to handle the large volume of claims and make sure those professionals are properly trained on California laws and regulations. We are focused on helping survivors, as they begin the long process of rebuilding their homes and their lives.”

He has ordered insurers to give insureds who are displaced an advance payment for up to four months of additional living expenses and 25% of policy limits for personal property as well ordering them to set up an expedited process for debris clearing as a first-step for rebuilding.